The sudden resignation of Japanese Prime Minister Shinzo Abe will have a direct and detrimental affect upon global trade liberalization. The departure of Abe, who encouraged a gradualist Japanese embrace of free trade, and the likely ascension of either Yasuo Fukuda, who has the most backroom support, or Tara Aso, who may prove slightly more popular with the public, to the head of a greatly weakened Liberal Democratic Party (LDP), essentially assures that a global trade deal will not be concluded within the year.
Mainstream media has mistakenly placed all the emphasis in the WTO Doha Round upon the Washington/Brussels dynamic; this is particularly true in the area of agricultural negotiations. Japan, however, is not only the world’s second largest economy, but also shares with the United States and the European Union the ignominious distinction of being the world’s largest users of trade distorting farm subsidies.
Political circumstances in Tokyo now make it inconceivable that Japanese bureaucrats will have the backing to do anything other than further retrench in WTO negotiations regarding agricultural market access and support; the permanent policy machinery in Tokyo will instead likely focus on cautious consolidation of bilateral trade pacts reached in recent months with various Asian partners. The ruling LDP, too, is likely to step back from bold new moves on global trade, and tack toward the anti-trade campaign tactics employed successfully by Ichiro Ozawa of appealing to traditional LDP rural strongholds in his successful drive to lift the opposition Democratic Party in recent upper house elections. In light of the LDP’s shrinking constituency, it would take an extraordinarily brave LDP politician to embrace more reform and liberalization at this juncture — moves certain to be unexpected from what will be essentially a caretaker government, regardless of who is selected by the LDP to follow in Abe’s wake.